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Suppose the current price of gold is $1,500 an ounce. Hotshot Consultants advises you that gold prices will increase at an average rate of 12%
Suppose the current price of gold is $1,500 an ounce. Hotshot Consultants advises you that gold prices will increase at an average rate of 12% for the next two years. After that the growth rate will fall to a long-run trend of 1% per year. Assume that gold prices have a beta of 0 and that the risk-free rate is 5.5%. What is the present value of 1.5 million ounces of gold produced in 8 years
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